US Banks Face Disadvantage In EU Over Dodd-Frank -ISDA

PRAGUE (Dow Jones)–U.S. banks may face competitive disadvantages in Europe as a result of regulatory differences between the U.S. and Europe, a board member of the International Swaps and Derivatives Association said at a conference Wednesday.

“It’s over-reach of the U.S. government to apply its laws in Europe,” said Diane Genova, an ISDA board member and managing director at JPMorgan Chase & Co. (JPM)

U.S. banks in Europe will be subject to European rules, but if U.S. rules apply, there may be overlapping and the risk of inconsistency in complying with various legislation regarding derivative trading, Genova said.

“[Dodd-Frank] will put U.S. banks at a competitive disadvantage in Europe” because they will be subject to more stringent rules than their European peers, she said.

Genova also said that in terms of trading both derivatives and commodities, strict U.S. rules may drive companies out of their home markets due to regulatory arbitrage.

Separately, Richard Metcalfe, head of global policy at ISDA, said he sees authorities in the U.S. and in Europe attempting to coordinate new regulations on foreign-exchange trade.

The ISDA continues to expect the U.S. government to create an exemption in the Dodd-Frank legislation for foreign-exchange trade, Metcalfe said.